Gold and the Empire

Mr. Chairman and Gentlemen,--I think I suggested to your Secretary that the subject of "Gold and the Empire" would be a suitable one. There are two sides to this subject that ought to be interesting to a Club of this sort. I suppose everyone has an idea that gold is something desirable; that, in fact, is one of the very few things in which we are all pretty much agreed. I have often wondered why gold was desirable. We take it for granted that it is, but I do not suppose that one of you has ever argued it out to find why it should be desirable. It is the heaviest of the common metals, too heavy to be convenient for coinage. It is of no use in the arts excepting the decorative arts; it is not used to any extent in the alloys or any other purpose. It is one of the least useful of metals, that is, if you take it as used in the ordinary mechanical arts. Of course, in the fine arts it is used to a considerable extent.

We shall not disagree in this statement that everybody does desire gold, looks on it as being worth having, but why should it have this peculiar position? It is the one thing that does not change in value. Stocks change, as you have discovered lately; silver goes up and down; platinum, the most precious of the common metals, goes up and down, and is now worth nearly double what gold is. It is not platinum, nor silver that we think of as the standard; it is gold. It is a very curious and interesting bit of history how that standard should have come to its present position. When you mine gold there is one very great satisfaction that you have your value immediately. In the case of steel or silver or cobalt you have to go through a long process before you can market your material and have your money, but gold is money in your pocket directly. It has always the same monetary value, $20.66 2-3 per ounce; no doubt about it. That is one reason why gold mining has such an attraction for everybody. As far as gold is concerned it is one of the commonest metals. Perhaps you may have an idea that it is scarce. As far as distribution is concerned gold is very widely spread. We have Boo miles of territory in Ontario where gold is found. From Larder Lake to the Lake of the Woods there is gold, and yet Toronto has sunk ten times the amount of gold in those mines that has come out of them. The fact is, that gold has a peculiarity not possessed by other metals; namely, that it always must cost at least as much as it is worth; therefore, if someone makes well out of gold mines it simply means that other people must have lost equally. Gold must be worth just about what it has cost. In many cases it has cost a good deal to make up the balance for other parts.

Why should gold be the standard of value? That is a question that we may very naturally ask. There are two or three reasons why gold is serviceable as a standard of value. In the first place, while it is widely spread it is on the whole a scarce metal; that is, you do not find very much in any given place. There is hardly any great country in the world that has not more or less gold, and yet there is little in any one place. That is one great advantage about gold, it is hard to get. If it was easy to get, the bottom would be knocked out of our whole business relationship. It is the fact that it is hard to get that makes it valuable. There are two or three other points that are of value in connection with it and give rise to our esteem for gold. The beauty of the metal is one of them, although I feel that copper, clean and fresh, is perhaps the most beautiful metal. Further, gold resists the action of all ordinary agents very well; does not tarnish easily. It has one or two disadvantages as a standard of value. The most important of these is the fact that it is a very soft metal. You cannot make a sword or a tool of gold. You must harden your gold or alloy it with copper to give the hardness that is necessary for a coin.

We might turn to another side of the question. Great Britain consists of three not very large islands off the coast of Europe. I suppose that is a familiar thing to the members of the Empire Club. It is one of those parts of Europe that contains very little gold, only one gold mine working, in Wales, which produced about three thousand ounces of gold last year. As gold is worth $20.66 an ounce you can see that the value of the gold mines in Great Britain was very small. They used to have some mines in Sutherland, and they found gold in Ireland. Here we have Great Britain, that contains hardly any gold of her own, possessed of a very large part of the gold of the world. Evidently Britain has gone out of her way to acquire gold. The growth of the British Empire has been largely bound up with the finding of gold. I will quote several examples of this. Not to go further than our own country; you remember that British Columbia not so long ago, about sixty years ago, was nothing but a Hudson's Bay post, with some Indians; one huge forest with the tremendous rivers that flow from the mountains, and no civilized inhabitants. What made British Columbia what it is? How was it that she suddenly sprang before the world? You all know. The gold hunters of the South had pretty well used up the best supplies in California, and they crossed the border by the tens of thousands. In about 1858 people turned their attention to British Columbia, and they easily acquired gold. The gold was the thing which first attracted attention to British Columbia. It was gold that gave us our Western Provinces.

It is doubtful if the Dominion, as we now understand it, would have come into being, with British Columbia as the Western side, but for the finding of gold. No one would have thought of building a railway through that wilderness if there had not been a powerful magnet at the end. You are all young enough to know exactly what happened in the Klondike, and I need not refer to the part that gold played there. The Klondike would have been the Arctic region which it is generally supposed to be (although in reality it has a delightful summer) if it had not been for the discovery of gold. Perhaps worth mentioning is the fact that the richest creek ever known in the world was Eldorado Creek in the Klondike. $20,000,000 worth of gold was taken out of it. So much for our part of the Empire. What about the other parts? We find that several of the most important developments of the British Empire have been along the line of acquiring gold-bearing regions. Australia for a long time was a name to conjure with as a gold-producing country. You know, of course, what it was in the beginning, a convict settlement where Britain unloaded some of her inhabitants that she was glad to get rid of. Botany Bay suggests anything but a beautiful place of plants and flowers. Australia, one of the brightest parts of the British Empire now, was not really found until gold was discovered. That was about 1851, so that you see Australia, from that standpoint, is only about sixty years old.

There was no Australia before, except the small settlement of Sydney and a few other places, but they amounted to nothing until gold was found. Gold drew people from the other side of the earth and gave Australia its population, and once you have attracted a population all other sorts of things are brought with it. Other metals are mined; you have a fertile country taken up as farms and large stock ranches. Australia was really opened tip and made of importance by its gold discoveries. That it would not have been important without gold, as it is now, is certain. It is probable that it would not have been of any account at all, especially when we consider the large area of desert land in the heart of Australia. After the best parts were taken up, there was a very barren waste towards the West; mainly waterless desert, in which it was almost at the risk of one's life that anything was done in the way of exploration. Who should explore such a wilderness? Now, the only reason for exploring in out-of-the-way places is gold. If you want to get a difficult bit of country explored all you have to do is to make it known that there is a large supply of gold there. If you want to have the Antarctic Continent opened up and known from rim to rim just make it perfectly clear that there is a gold deposit at the South Pole and the region will be opened up in a very short time. Just so in Australia. Hundreds of miles in from the coast, where there is no water but brackish water, they found rich gold mines, and as a result fine towns are growing up, hundreds of miles from the strip of fertile coast. They have put down enormous water-works and are pumping water hundreds of feet high and hundreds of miles inland to keep the place going. All this was due to gold.

Finally, I suppose we may come to South Africa. It is a part of the world that has interested every Briton and every lover of the British Empire very greatly of late years. We are rather dropping out of the habit of talking of South Africa now since Botha is the Premier, and the new colony, I suppose, is well able to look out for itself. South Africa has been a kind of touch-and-go part of the British Empire. Sometimes we have made a tremendous push and acquired a large amount of territory, and then there raged native wars and we got sick of it, and handed things over to somebody else. Then something else happened and we started in again. You know of the half-dozen different policies in South Africa in the last hundred years. There was one thing that was going to make the change in South Africa.. That thing was gold. It was not a question of preserving the natives from the cruelty of the Boers. It was not the question of owning a sub-continent. Nobody cared about that. It was gold that settled the question, the gold of the Transvaal. If it had not been for that it is probable you would have two little states there fighting with the natives, and no one paying any attention to them. Probably the central part would have become a Boer colony. In regard to the Transvaal, why should it be so important? Africa has been looked on as a gold-bearing region for a long time. You have heard of King Solomon's Mines; they may or they may not have been in South Africa. We do know that someone mined gold there hundreds of years ago, and that the present white men and the present natives do not know who they were. They knew enough to get the best part of the gold veins out. The present miners have one advantage over the ancient group of miners, that they have the power of steam for pumping, so that they can work to a lower level.

Gold mining has become of more importance in Rhodesia. Why should Rhodesia be a part of the British Empire? " Because Rhodes willed it," you will say; but why? Because he believed there was gold there. It was this ancient gold field that attracted him, and slowly that gold field has been developed, and is now of considerable importance. The most important gold field in Africa, in the world, at the present time is the Transvaal. And I want to say a word in order to give you an idea of how really unique that region is. Suppose that we had a bit of territory that stretched from here down to Whitby or Port Hope, and we had it divided up into mines, and we allowed a width of about a township or a township and a half, what sort of a country would you think that, to provide the world with one of the most important substances? Out of that little stretch of territory about thirty-five miles long and ten miles wide more gold is produced today than is produced in the whole of North America. Now you see what the Transvaal means. In every other part of the world you have gold in very uncertain deposits. In the Transvaal they have gold deposits that seem to have a peculiar facility of holding out. That makes all the difference in the world. Instead of having gold-bearing veins in the Transvaal we have great sheets of rock that contain gold. These are called banquette,--a kind of conglomerate. We have this peculiar type of conglomerate that contains some gold, and that conglomerate is rock, and it dips down with the other rocks, and if you have a square mile of that rock, you can reckon pretty accurately how much gold you have.

The sheets of conglomerate are not thick, perhaps not over a few inches, and yet it is two or three sheets of conglomerate of that sort that make the wonderful resources of the Rand. They had in the beginning a row of out-cropping mines, because these rocks are in the form of a basin. All along the edge where this rock cropped out, the gold was found and mines are worked. It was observed that these mines dipped under and began to flatten out somewhat, and they suspected they would get it at the next row of mines, and so a row of dips were established, and they are beginning to sink shafts four or five thousand feet down without a hint of gold at the surface, and away below the surface they have these sheets, still auriferous, still gold-bearing. The United States is a great gold-producing country,--in Alaska, California, Nevada, North Dakota, etc., there are thousands of square miles of gold-bearing territory-and yet this little patch of country produced a third more gold last year than the great United States. The Transvaal was something that was worth fighting for, and there is no doubt that it was gold that made the whole disturbance in South Africa. The British Empire has been acquiring gold-bearing territory. Great Britain, itself, has very little gold of its own, but it has at present the most important gold-bearing country in the world, with the exception of the United States. I suppose you have always thought of India as a swarming country where the people lived on a handful of rice a day, but a country without much in the way of metals. In the Madras province there is an important gold field. They produce more than $10,000,000 worth of gold per annum in India, so that India is rather an important gold-producer. New Zealand is not generally considered important, but $6,000,000, or $8,000,000 worth of gold are produced there annually. British Guiana, in South America, produces a million or two of gold. Here and there all over the world Britain has her foothold. Ontario has gold, more or less. Last year it was less, being only about $40,000 worth. British Columbia produced last year $6,000,000. The Klondike still has gold, although the hey-day of the Klondike is done, the better grades are worked out. In practically every part of the British Empire there are gold deposits. It looks as though Britain has laid herself out to acquire gold. The total output of gold for the British Empire, leaving out the smaller places, was $235,324474 Of this, Rhodesia produced $10,201,327; India, $10,665,674; Canada, $12,000,000; Australia, $82,851,861; the Transvaal, $119,605,922. The only other country that we can compare with the British Empire was the United States, which produced $97,155,201. The total gold production of the world amounted to $404,649,685. The British Empire produced $235,000,000, very much more than half. It looks unfair. There is another side to the thing. The gold of the British Empire does not all go to Great Britain. The Transvaal gold goes elsewhere. Gold has no country; it goes anywhere--where people are willing to pay most for it. You know how it has been with the Bank of England lately. The Bank of England itself cannot hold its gold. There is more gold at present in the Bank of France, in the Berlin Bank, in the Austrian Bank, and in the Banks of St. Petersburg, than in the Bank of England. The reason for that is, of course, that in England all sorts of shifts are made not to use the gold, and yet England is the one great country in the world where gold is in constant use. Nevertheless, the total amount of gold in Great Britain is not so very great. Britain controls the gold output of the world, but Great Britain herself does most of her business by cheque, and in other ways that do not require the actual transfer of the coin.

In conclusion, it is worth while to suggest that although gold is the standard of value, there may be changes in that respect. There was a time when silver was the standard of value in England. We use the term "pounds." Why pounds? Not pounds of gold, but pounds of silver. The pound in Great Britain was once a pound of silver. But there is one very serious aspect of the thing, especially to men like myself who have a fixed salary. Although gold is the standard, other things are going up in value of late; that is, you have to pay more to get a given quantity of anything now than you did ten or twenty years ago. The reason for that is the finding of these great gold mines. The gold of the world is steadily increasing, and instead of it showing itself in a depression in the value of gold, it is showing itself in the added price of everything we buy. Gold is falling in value in reality, or the other things are rising in value if you like; it comes to the same thing to the man of fixed income. I think the wonderfully good times of the last few years have been very largely due to the increased amount of gold. The standard everywhere is gold, and the increased amount has given a fillip to business everywhere. If it goes much farther it may have a reverse effect.